Chipped tile claims are under assault by Florida insurance companies. Indeed, South Florida insurance companies have seen a steady rise over the years in the increased number of chipped tile claims. As a result, insurance companies are fighting back. Insurance companies are denying more and more of these claims every day. When they are not denying these claims, they are often quicker to exercise their right to repair, which triggers different contractual obligations between the parties. Citizens was even able to modify its policies to have a $10,000 cap for cosmetic or aesthetic damage to flooring, including, but not limited to, chips, scratches, dents, marring or any other damage that covers less than 5% of the total floor surface area of the building and does not prevent typical use of the floor.

As with most cases, Benjamin Ergas’s legal odyssey started inconspicuously. Benjamin Ergas, the insured, dropped a hammer on his tile floor, causing it to chip. The chip was about the size of the hammer head. He filed a claim for the damage with Universal, his homeowner’s insurance company. Universal denied the claim. They denied the claim on grounds that the policy excluded coverage as follows:

“We insure against risk of direct loss to property… We do not insure, however, for loss: . . . 2. Caused by: . . . (e) Any of the following: (1) Wear and tear, marring, deterioration . . . .”

The insured then filed a lawsuit against his insurance company, Universal, seeking coverage for his damaged floor. The trial court, however, entered summary judgment in the insurance company’s favor. In so doing, the trial court agreed with the insurance company that the damage was excluded under the insurance policy because “marring” was not covered. The insured then challenged that ruling by filing an appeal with the Fourth District Court of Appeal.
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On appeal, the insured argued that the term “marring” was ambiguous because the policy did not define the term. Long standing Florida law states that any ambiguity in an insurance policy should be interpreted in the insured’s favor, and coverage afforded. The insured also argued that under the doctrine of ejusdem generis, the term “marring” should be read in context. Since “marring” was found in the policy between the terms “wear and tear” and “deterioration” it suggests that marring was intended to refer to damage which was caused over time. Since the damage from the dropped hammer was sudden, the insured argued it was covered under the insurance policy, and not excluded by the “marring” exclusion.

However, the Fourth District Court of Appeal was not persuaded by those arguments. As a result, the appellate court concluded that the “the damage caused by the hammer dropping constituted marring and thus was excluded from policy coverage.” In sum, they affirmed the trial court’s conclusion to deny coverage.

The appellate court’s ruling, however, completely dismisses the sudden and accidental concept of damage. Indeed, and in dismissing that notion, the ruling does go to great lengths, in a footnote, to mention that the insured’s attorney did not argue that the insurance company’s interpretation of marring could potentially cover almost all damage to the insured’s property, whether slight or substantial. In other words, while the court noted that the term was not ambiguous, it suggested that term could very well be overbroad. And that could potentially be problematic since the overbroad use of the term of “marring” could pertain to most of what an insured would expect the policy to cover. Simply put, a definition of “mar” or “marring” which included serious injury would essentially gut coverage under the insurance policy. And the court noted that a term used within the insurance policy should not be construed to reach such an absurd result as potentially gutting all available insurance coverage under the policy. Gen Star Indem. Co. v. W. Fla. Village, Inc., 874 So.2d 26 (Fla. 2d DCA 2004).

On the other hand, since the insured’s attorney did not argue that the definition of marring is ambiguous because that term, as used by the insurance company in this case, is potentially overreaching, overbroad, and ambiguously over-inclusive of damage, the appellate court did not address that concern that they themselves noted could be very problematic for insurance companies.

Therefore, it is possible that if the appellate court is confronted with an argument that the term “marring” is ambiguous because of its potentially over-inclusive interpretation gutting just about all other available coverage that the appellate court may reach a different conclusion than the one reached in Ergas.

But until then, insurance companies will no doubt rely on Ergas to deny many “chipped tile” claims that were the direct result of a “sudden” and “accidental” event that was once covered and paid by the insurance companies.

Before opening our law firm in 2006, our attorneys worked for some of the state’s, and nation’s, largest law firms, and worked representing the insurance companies for years. Our attorneys are now uniquely positioned to use that experience to assist individuals and businesses alike throughout Florida with their insurance claims. As a result, our attorneys are well versed in the impact insurance has on businesses, condominiums, and individuals alike. Our insurance litigation practice group is prepared to tackle your insurance claim.

Given our extensive experience litigating for, and against, insurance companies, our insurance litigation practice group is prepared to provide aggressive, efficient and effective representation on a broad spectrum of insurance claims in Florida for local, national, and international clients. We are prepared to advocate insurance claims at the pre-suit stage, trial, appellate and arbitration levels.

The insurance company often has a right to repair the damaged property in the event of a loss. This right is found in many insurance policies. Moreover, when the insurance company elects to repair the damaged property, that election is binding on the insured.

But the insurance company’s election to repair the damaged property creates a new contract with its insured. If the insurance company breaches that new contract to repair then the insurance company becomes liable for the damages proximately caused by this breach despite the policy limits. Thus, for instance, if an insurance company elects to repair property and then fails to do so, the insured may recover damages for loss of use.

Today, more and more insurance companies are invoking the right to repair. When they do so, they are creating a new repair contract with no limit of liability. Please contact our office today if you are in doubt regarding your rights under the insurance policy.

However, what many field adjusters working for insurance companies are doing is often “pushing” an insured into selecting a contractor of the insurance company’s choosing without so much as giving the insured an option to select a different contractor. That contractor “selection” often times becomes a source of dispute in litigation, especially when the insured is never given a choice to select a different contractor.

For instance, in Drew v. Mobile USA Ins. Co., 920 So.2d 832 (Fla. 4th DCA 2006), the appellate court concluded that a jury must decide whether the insured had in fact selected the contractor that performed repairs to the damaged property, or if the contractor was selected by the insured. In so ruling, that court concluded as follows:

where the insurer elected to repair, the insured could recover damages for loss of use proximately caused by the failure to repair it within a reasonable time, even though there was no coverage in the policy for loss of use. when the insurer makes its election to repair, that election is binding upon the insured and creates a new contract under which the insurer is bound to restore the property within a reasonable time. Where the insurer breaches this new contract to repair, it becomes liable for the damages proximately caused by this breach. Thus, this court allowed the insureds to recover damages outside of the scope of the policy in their breach of contract claim, even though the insurer was not alleged to have acted in bad faith. See also State Farm Mut. Auto. Ins. Co. v. Dodd, 276 Ala. 410, 162 So.2d 621, 626 (1964) (“It is the general rule that where a policy gives the insurer an election to repair or pay, the exercise of the option to repair converts the original contract into a contract to repair, subject of course to various refinements and exceptions.”).

If the insurance company selects the contractor to repair the property, and if the repairs are done poorly, then the insured could be able to recover damages in excess of the policy limits including damages for loss of use.